Why smart women do stupid things with their money

Wednesday

WASHINGTON — On the face of it, the landscape of personal finance is a man's world.

Men's faces dominate our currency.

Men largely control Wall Street and the firms that hold and invest our money.

And when you see a commercial about financial advising, it's almost always a man giving the advice.

But James Brown was right when he sang, "This is a man's world. But it wouldn't be nothing, nothing, without a woman or a girl."

Ladies, if you think that this financial stuff isn't your thing, you've got to change your perspective. Because it's very likely you will at some point be the sole money manager in your household either because you're single, divorced or widowed.

So, yes, you can invest as well, if not better than, men.

You can ask and get the salary you deserve.

You can conquer the emotions that prevent you from making wise financial choices, or starting that business.

And you most definitely have the ability to raise money-smart children.

I mean no disrespect to men, but there's a financial revolution coming, and women will dominate it.

As Jean Chatzky, financial editor for NBC's "Today" show, points out, women will control 75% of discretionary spending around the world by 2029. By 2030, 66% of America's wealth will be held by women.

"Yet to take all this additional wealth and simply plunk it into the financial playbook that men have used for decades doesn't work because we are different," writes Chatzky in her new book "Women with Money," which is this month's Color of Money Book Club pick.

Without any condescension, Chatzky encourages women to embrace their differentness and find financial self-confidence.

"In years past, research showed women to be more reluctant than men when it came to taking risks with our investments," she writes. "That hurt us, particularly when money stashed into low-earning bank accounts could have been earning stock market returns."

Chatzky spends a lot of time talking with women about their financial fears, frustrations and feats. She launched a website for women called HerMoney.com. She also hosts a popular podcast for women called "HerMoney with Jean Chatzky."

Rather than jumping right into what women should be doing with their money, Chatzky first asks this important question: What do you want from your money?

You can't make smart decisions without looking at the big picture — your short — and long-term needs and wants. Not figuring out what you want to do overall with your limited resources is why smart women — and men — do stupid things with their money. You also have to check your emotions.

Let's say you're in the middle of a divorce and you want to hang on to the house for the sake of physical stability for the children. But alone you can't afford the mortgage and upkeep. It would be better to move, downsize even, and focus on creating financial stability. If you don't, you'll stress yourself out, along with your children, trying to hold on to something that you can't manage.

It's also possible that you're trying to keep the home because your backstory was one of instability. It's not that emotions are bad, it's that emotions can cloud your judgment, Chatzky says.

"We're better off learning to recognize our emotions and what they are likely to trigger us to do, rather than separate them from our actions," she writes.

One way to beat back dumb decisions is to slow down. Put some time in between your mood and a financial move.

If you're an emotional shopper, put things in your online cart but take a day or two before clicking the "buy" button, Chatzky suggests. Don't jump out of the stock market when it has taken a tumble. Pause and consider that investing is a way to stay ahead.

"Once you become aware of the fact that your emotional brain is driving many if not most of your behaviors, then you can build in a little time between the emotion and the action," she says. "And the fact that the emotion will have subsided during that time will often result in not taking the action at all."

The best money managers spend time understanding their financial selves, Chatzky says. They also develop a system to manage financial issues within their relationships.

In "Women with Money" Chatzky facilitates the conversations that must be had if you want to earn more money, invest it, leave a legacy and, most importantly, enjoy it.

I'm hosting an online chat about "Women with Money" at noon Eastern time June 27 at washingtonpost.com/discussions. Chatzky will join me to answer your questions on how to get the financial life you want. Men are also welcome.

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